Digital gold in India operates under the same legal framework that governs the sale of physical gold. It is not regulated by SEBI or the RBI, but that does not make it illegal or outside the law. Transactions are governed by GST rules, contract law, and consumer protection regulations, just like any other gold purchase. With more than 8 crore digital gold customers in India today, leading players in the industry have come together and established the Digital Precious Metal Assurance Council of India (DPMACI). The DPMACI has established standards to ensure that all consumers purchases are 100% backed by physical gold, with regular independent audits and grievance redressal mechanisms for consumers.
What does the DPMACI do for consumers?
- Mandatory, regular independent audits of customer records as well as vaulted precious metal to ensure 100% of customer purchases are in the form of vault stored precious metal
- Standardised consumer disclosures
- Defined grievance mechanisms and escalation process for consumers through an Ombudsman system
- Standards for quality of precious metal and independent periodic testing to ensure weight and purity
- Custody and insurance standards
DPMACI is also in active dialogue with the authorities to pro-actively work on enshrining these standards through a more formal legislative and regulatory framework. Till that comes about, the DPMACI is committed to ensuring a world class framework for ensuring consumer protection in the Indian digital precious metals industry.
SEBI released an advisory notice on 8 November 2025, which stated that digital gold is “unregulated”. That statement was technically accurate but widely misinterpreted.
This article breaks down what SEBI actually said, what’s unprotected, what structural safeguards already exist at responsible platforms.
What the SEBI Advisory Does Not Mean
Three misreads circulated widely after the November advisory, and they’re worth correcting upfront.
- It is not a ban on digital gold. SEBI issued a caution, with a focus on asking consumers to do their due diligence on the counterparties they are dealing with for digital gold. SEBI did not issue a prohibition on the product. Buying, holding, and selling digital gold remains entirely legal in India.
- It is not a finding that all digital gold platforms are unsafe. SEBI’s advisory described certain risks that exist across the category due to the absence of mandatory oversight. It did not evaluate individual platforms or their specific safeguards.
- It does not mean physical gold is regulated. Physical gold, including jewellery purchased at any branded store, is also subject to no SEBI oversight. To our understanding, the regulatory concern has arisen due to the practices followed by certain unscrupulous players.
The advisory is best understood as a statement of where investor protection mechanisms are absent, which makes it equally clear what to look for where they are present.
What SEBI’s November 2025 Advisory Actually Said
SEBI’s finding was specific and unambiguous. Digital gold is not regulated by SEBI or RBI. But that does not mean it exists outside the law. It is governed under the same legal framework that applies to the sale of physical gold, including GST, contract law, and consumer protection laws.
The advisory flagged the risks not all digital gold providers offer the same level of product and consumer protection. The following table highlights key risks that consumers should evaluate
| Risk Category | What It Means for Investors |
| No SEBI regulatory oversight | Is the provider a member of DPMACI and follow the published standards |
| Counterparty and operational risk | Does a digital gold platform have an independent reputable trustee and custodian to ensure that customer assets are always safe |
| Non-standardised disclosures | Are prices, terms and fees clearly disclosed prior to any transaction |
| No SEBI grievance route | Is there an ombudsman that a customer can approach for grievance redressal |
Why Digital Gold Falls Outside India’s Regulatory Framework
In India, most gold transactions, including jewellery purchases, are not regulated by SEBI. Digital gold is subject to the same legal treatment as physical gold sales, except for how it is held and administered.
This is fundamentally a classification issue. Digital gold today sits between categories: it is not a security, not a traditional commodity exchange product, and not yet defined as a separate regulated asset class.
The gap is also visible when compared to SEBI’s own regulated alternative. The Electronic Gold Receipts (eGR) framework, introduced in 2022, has seen roughly ₹100 crore in total volume since launch. In contrast, digital gold platforms recorded around ₹3,926 crore in a single month (January 2026).
This disparity suggests that the regulatory gap exists not because digital gold is avoiding oversight, but because the regulated alternative has not kept pace with market demand.
- As of SEBI Chairman Tuhin Kanta Pandey’s 21 November 2025 clarification, SEBI was not considering a new rules framework for digital gold at that stage.
- Any future statutory framework would first need to resolve the core classification issue: whether digital gold should be treated as a securities-market product, a commodity-linked product, or a separate consumer-gold category.
- It is also important to separate the asset from the format. Physical gold sold by jewellers is not SEBI-regulated either.
The Structural Safeguards That Exist Right Now
In the absence of mandatory regulatory standards, there is no uniform baseline for how digital gold platforms operate. Custody structures, disclosures, reconciliation processes, and investor safeguards can vary significantly between providers.
This is precisely why investor due diligence matters today and why DPMACI is playing a critical role in establishing minimum standards across the industry.
Here’s what separates stronger platforms from weaker ones:
| Safeguard | What to Look For | What Absence Signals |
| Independent vaulting | Named, third-party custodian (not the platform itself) | Gold may be on the platform’s balance sheet |
| Independent trustee | A separately governed trustee who verifies gold backing | No external check on whether digital units = physical gold |
| Third-party audits | Published and current reconciliation reports | No confirmation that holdings match physical inventory |
| Insurance coverage | Vault and transit insurance, clearly stated | Unprotected physical gold |
| Transparent fee structure | GST, buy-sell spread, and any storage costs disclosed upfront | Hidden costs that erode returns |
| Clear redemption terms | Physical delivery or sale conditions without hidden conditions | Redemption that’s marketed but difficult in practice |
SafeGold’s structure addresses each of these.
- Your gold is stored in Brinks vaults, not on SafeGold’s books.
- Vistra, an independent trustee, performs ongoing reconciliations to verify that every gram held on the platform corresponds to physical gold in the vault.
- Insurance covers your gold both in storage and in transit.
- Custody is free for the first 24 months, after which a nominal storage fee may apply with prior intimation.
- The only cost at purchase is the 3% GST that applies to all gold transactions in India.
To gain an in-depth understanding of the full security structure, here’s a quick read: “Is Digital Gold Safe? Security and Storage Explained.”
Digital Gold vs Regulated Gold Instruments: A Practical Comparison
SEBI’s advisory recommends regulated gold instruments as alternatives. That’s accurate, and investors with long-term allocations should understand what they’re choosing between.
| Parameter | Digital Gold (SafeGold) | Gold ETF | Sovereign Gold Bond (SGB) |
| SEBI regulated | No | Yes | Yes (RBI-issued) |
| Minimum investment | ₹10 | ~₹500 (1 unit) | ₹5,000 (1 gram) |
| Lock-in | None | None | 8 years (5 years for early exit) |
| Annual yield | 0% (or 4% via leasing) | 0% | 2.5% p.a. |
| LTCG tax | After 24 months (12.5%) | After 12 months (12.5%) | Nil at maturity |
| Physical conversion | Yes – coins, bars, jewellery | No | No |
| Demat account required | No | Yes | Yes |
| Investor grievance via SEBI | No | Yes | Yes |
| New issuances available | Yes | Yes | Paused since 2025 |
The comparison is not a verdict. Each instrument serves a different investor profile, and the investment decision should follow from your goals.
If you’re weighing digital gold against other formats more broadly, these guides on Digital Gold vs Physical Gold: Which One Should You Buy in 2026? and Gold vs Stock Market: A Performance Comparison in 2026 lays out both sides without pushing a conclusion.
However, if you’re already committed to gold and want your holdings to generate income while you wait, SafeGold’s Gains (gold leasing) product earns 4% per annum, paid monthly in grams of gold.
Conclusion
The DPMACI is pioneering the standards for digital precious metal in India. SEBI’s advisory highlighted the need for customers to choose their digital precious metal provider with care and diligence. What it also highlighted is the difference between platforms that proactively build safeguards and those that operate within the regulatory gap without structure.
As the DPMACI framework develops and formal classification eventually emerges, the gap between these platforms will become more visible, not less.
SafeGold has been building that structure from the start. Start investing in digital gold on SafeGold from ₹10 and see it for yourself.
FAQs
Q. Is digital gold legal in India after the SEBI advisory?
A. Yes. SEBI’s November 2025 advisory is a caution, not a prohibition. Digital gold remains legal to buy, hold, and sell. SEBI clarified that it falls outside its regulatory jurisdiction, which is a different statement from declaring it illegal.
Q. What is SEBI’s regulated alternative to digital gold?
A. SEBI recommends Gold ETFs, Gold Exchange Traded Commodity Derivatives (ETCDs), and Electronic Gold Receipts (EGRs) as regulated alternatives, all of which can be purchased through SEBI-registered intermediaries.
Q. Does SafeGold have any investor protection despite being unregulated by SEBI?
A. SafeGold operates with independent trustee oversight (Vistra), third-party vaulting (Brinks), insurance on held and in-transit gold, and transparent fee disclosures. These are structural safeguards, not statutory ones, but they directly address the risks SEBI identified in its advisory.
Q. What will DPMACI do?
A. DPMACI mandates independent audits, operating and structural standards, standardised consumer disclosures for operators, and a defined grievance mechanism. It functions as industry self-regulation pending formal statutory oversight.
Q. Is digital gold taxed differently from Gold ETFs?
A. Yes. Digital gold is taxed as physical gold. Long-term capital gains are taxed at 12.5% after a 24-month holding period. Gold ETFs qualify for LTCG after 12 months at the same rate. SGBs held to maturity are exempt from capital gains tax entirely.